CHS Hedging AML controls criticized in $6.5M CFTC action

A Minnesota-based futures commission merchant was fined $6.5 million by the Commodities Futures Trading Commission (CFTC) for anti-money laundering (AML) program gaps and other risk management and recordkeeping failures.

CHS Hedging failed to apply adequate AML policies from January 2017 through December 2020 in the case of an owner of a ranching business and his futures and options trading account, the CFTC alleged in its order published Tuesday. The ranch owner is not named in the order, though the agency listed its case against Cody Easterday and Easterday Ranches under related filings.

Easterday pleaded guilty in March 2021 to criminal charges related to defrauding Tyson Foods and another company out of more than $244 million through a “ghost cattle” scam, in which he billed Tyson and the other company for the costs of purchasing and feeding 265,000 cattle that didn’t exist. He instead used $200 million of the money to cover commodity futures contract trading losses. Easterday was sentenced to 11 years in prison and ordered to pay $244 million in restitution in October.